Turmoil in financial markets prompted investors to pull $27.3 billion from U.S. mutual funds last week, the biggest withdrawal in more than two years.

Stock funds suffered redemptions of $11 billion in the week ended Aug. 26 while bond funds saw outflows of $12.1 billion, according to a statement Wednesday from the Investment Company Institute, a Washington-based trade group. Funds that buy a mix of stocks and bonds had redemptions of $4.3 billion.

Stocks tumbled last week as investors speculated that an economic slowdown in China could harm growth prospects in the U.S. Junk bonds also lost ground, according to the Bank of America Merrill Lynch High Yield Index.

The last time investors withdrew more money from mutual funds was the week that ended June 26, 2013, when they pulled $28.7 billion, ICI data show.

Turmoil in financial markets prompted investors to pull $27.3 billion from U.S. mutual funds last week, the biggest withdrawal in more than two years.Stock funds suffered redemptions of $11 billion in the week ended Aug. 26 while bond funds saw outflows of $12.1 billion,...